Sterling falls as Brexit headlines eyed

LONDON, Sept 27 (Reuters) - The British currency tumbled on Thursday on the back of broad dollar gains after a U.S. rate hike, and as investors waited for more Brexit-related headlines in the absence of any fresh economic drivers.

Sterling fell more than a third of a percent to $1.3109 and edging towards a one-week low of $1.3042 hit last week. Against the euro, the British currency was broadly flat at 89.23 pence.

“Political headlines continue to drive any price action on sterling with broad risk appetite muted,” said Manuel Oliveri, a currency strategist at Credit Agricole in London.

The leader of Britain’s opposition Labour party Jeremy Corbyn will warn the EU’s Brexit chief Michel Barnier of the dangers of a “no deal” Brexit when he visits Brussels on Thursday, his party said.

UK Prime Minister Theresa May has said the EU needs to show Britain respect and come up with its own alternatives to her so-called “Chequers” proposals, which EU leaders rejected at a summit in Austria last week.

The dollar rose against its rivals and particularly against the euro after the U.S. Federal Reserve raised interest rates on Wednesday and left intact its plans to steadily tighten monetary policy while sentiment towards the single currency was dogged by Italian budget concerns.

With little in the way of big market-moving economic data in the near-term, domestic politics and sentiment around Brexit talks remain the driver for the pound.

Britain’s ruling Conservative Party hold their annual conference next week, and all eyes are on whether May can win over critics of her Brexit proposals. (Reporting by Saikat Chatterjee; Editing by Hugh Lawson)